DAX has been unable to break above resistance at 9300 and 9400 only to pull back towards short-term support of 9150. The neckline of a possible Head and Shoulders pattern is critical for the short- and medium-term view I have about DAX. Although I expected this market to outperform and not lag behind the US indices, instead it has been trading in a range between 9150-9400.
Breaking below the red neckline support at 9150 will probably push the index back below 9000 towards 8900. On the other hand a break above 9300 will push the index higher to test previous highs at 9470 with increased chances of making a decisive break out towards 9750. With the US equities consolidating near their highs, DAX is clearly left far behind. Will it catch up or is the performance in DAX a sign of things to come? DAX bulls should watch out for a break below 9150. In order for bulls to maintain control of the trend, DAX will need to retake 9300 soon and then break 9470. Retaking 9300 will be enough I believe to fuel a strong rally as many have been trading the H&S pattern. However a H&S pattern is validated only when the neckline breaks. Not before. So many stops at the right hand shoulder will be triggered if we break 9320.
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